Lahore/Karachi - OUR STAFF REPORTERs -
Expressing serious concerns over the proposed revision of entire tax regime simply through a Presidential Ordinance by the interim government, the business community said that the FBR has not taken stakeholders into confidence and, instead of widening the tax net it has once again adopted traditional way to squeeze those who already pay taxes.
They pointed out that such negative moves, recommended by the FBR, will destroy the economy, as it will promote black economy, smuggling, tax evasion, under-invoicing, miss-declarations and result in further decline in exports. They said that Caretaker government is only responsible for maintaining existing systems and has no authority to take such drastic measures, which have such long term negative repercussions. Opposing the plan for presenting mini budget by the caretakers, they said that presentation of budget for 2013-14 is the prerogative of the newly-elected government.
It is to be noted that the government has proposed to revise almost the entire withholding tax regime and impose one percent Customs duty on the import of 284 duty-free items. The FBR has proposed to increase standard rate of sales tax from 16 to 17 percent and imposed 2 percent further tax on supplies to un-registered persons. The FBR has also proposed to impose 5 percent withholding tax on purchase of new cars and jeeps. The rate of withholding tax on cash withdrawal from banks would be increased from 0.2 to 0.3 percent.
Pakistan Association of Automotive Parts & Accessories Manufacturers Chairman Munir Bana said that the most disturbing news for auto sector is the proposed 5 per cent advance tax on booking of a new car would have a negative impact on the volume growth of this industry, which is still reeling from the impact of recent amnesty to smuggled cars as well as the import of used cars up to first quarter, which together has hurt local car production by 105,000 vehicles, equivalent to one year’s production capacity of the industry.
PAAPAM vice chairman Usman Malik said caretakers must shun from making such vital decisions of national importance, as such decisions need to be discussed in National Assembly. He requested the PML-N chief Mian Nawaz Sharif to issue statement against this decision and matter may be discussed in National Assembly.
He added that proposed 5 per cent tax on booking of a new car which would lead to instant increase in the rates of locally made cars by a substantial amount, which has not yet recovered from the massive downturn of 2008-09 due to unfriendly policies of last government.
Meanwhile, the caretaker government has no constitutional or moral authority to make sweeping changes and take major policy decisions which in fact are a premature announcement of budget and Karachi Chamber of Commerce & Industry (KCCI) rejects all such premature and unlawful measures prior to budget 2013-14.
KCCI in a press conference chaired by Muhammad Zubair Motiwala, Vice Chairman Businessmen Group & Former President KCCI, in the presence of Muhammad Haroon Agar, President KCCI totally rejected the Caretaker Government’s proposed mini-budget.
This action by FBR is indeed a cover up for its failure to achieve revenue targets for 2012-13 and an attempt to pass-on the responsibility to the new government. Preparation and implementation of budget 2013-14 is a prerogative of the elected government which is expected to take charge in the next 10 days, which is just prior to start of next fiscal year.
An across the board increase in taxes by the Caretaker Government and FBR has come as a shock to business and industrial communities all over Pakistan. The incompetence and lack of will on the part of FBR to broaden the tax base is reflected in the drastic increase in GST and WHT on existing taxpayers and is a short-cut to achieve revenue targets. The measures are bound to failure and will result in widespread protests by the trade and industry.
They said mini-budget proposed to be implemented through presidential ordinance has reversed most of the measures announced by the former Government in the budget last year. These harsh measures would act as disaster for the manufacturing concerns, export-oriented industries, trade and industry.
Against the proposals of apex bodies all over Pakistan which have demanded reduction of GST to 8-9pc, the FBR has proposed an increase in GST upto 17pc. This measure will result in tax evasion and discourage new potential tax payers. Tax collection will not increase as a result of increase in GST rate. By virtue of making all Sales Tax Registered persons as With-Holding Agents, the system has been made more complicated and will encourage black economy.
Such anti-business actions deliberately taken by FBR are aimed at destroying the economy as it will flourish black economy, smuggling, tax evasion, under-invoicing, mis-declaration and decline in exports. Imposition of 10pc With-Holding on domestic consumers of electricity is too high and unbearable for domestic consumers. The high rate will only lead to pilferage and theft of electricity. Increase in the With-Holding Tax on commercial importers from 5pc up to 6.5pc is absolutely unacceptable since it will sharply increase the cost of raw materials and will open the floodgates for smuggling, under-invoicing and evasion.
The FBR has no will and intention to broaden the tax base and instead of bringing those untaxed individuals with massive wealth and substantial income into the tax net, the FBR is using the conventional tactics of squeezing the honest tax payers who are already in the net.
Here, the KCCI, while congratulating PML-N in Federal and PPP in Sindh for winning elections, they pledged all support to their positive steps to boost economy and bring more vibrancy to the wheels of industry. Representatives of Seven Industrial Town Associations affiliated with KCCI participated in Press Conference Including Chairman, Pakistan Hosiery Manufacturers & Exporters Association and Pakistan Yarn Merchants Association.